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SEBI probe into Jane Street profits highlights worrying aspects astir India's derivatives marketplace structure. (AI image)
Jane Street Group, the US trading powerhouse that was slapped with a trading prohibition successful Indian markets connected Friday, made a whopping Rs 735 crore single-day nett during a January 2024 trading session, according to a SEBI bid published that day.The important net were portion of Jane Street's full profits of Rs 36,502.12 crore crossed assorted marketplace segments successful India from January 2023 to March 2025. SEBI's elaborate probe specifically highlights January 17, 2024, erstwhile the organisation allegedly implemented a blase "Intra-day Index Manipulation" strategy involving the Bank Nifty scale and its components, resulting successful important gains from scale options, according to an ET report.
What did Jane Street bash to marque Rs 735 crore single-day profit?
- On January 17, 2024, the Bank Nifty scale commenced trading considerably little astatine 46,573.95, down from its erstwhile closing worth of 48,125.10. "Media reports claimed that this autumn whitethorn beryllium attributed to the market's evident disappointment with the results announced by HDFC Bank aft marketplace adjacent connected January 16, 2024," SEBI noted.
- The regulatory assemblage identified a dual-phase attack that enabled Jane Street to accumulate a nett net of Rs 734.93 crore wrong respective hours of trading.
- During the archetypal trading period—"Patch I"—the organisation allegedly purchased Bank Nifty constituent stocks and futures valued astatine Rs 4,370 crore, which SEBI noted was sizeable comparative to emblematic marketplace trading volumes. These acquisitions resulted successful terms increases, causing marketplace participants to incorrectly construe it arsenic a marketplace recovery.
- "At a clip erstwhile participants successful scale options markets are misled by the supra enactment for Nifty Bank, JS Group builds efficaciously Rs 32,114.96 crores of bearish positions successful the overmuch much liquid Nifty Bank scale options by buying inexpensive Put options and selling costly Call options," the bid said.
- During the consequent phase—"Patch II"—Jane Street disposed of astir each its semipermanent holdings. "The income are aggressive, successful a mode that pushes down prices successful the constituent stocks and hence the index. JS Group books losses successful intraday cash/ futures marketplace trading," the SEBI bid alleged.
- The profits generated from scale options importantly outweighed the equity losses. When the Bank Nifty scale declined from its greeting peak, enactment options accrued substantially successful worth whilst telephone options decreased. "Profits successful scale options much than compensate for the JS Group's losses successful intraday cash/futures trading," SEBI said.
Jane Street ‘Manipulation’ Pattern
Jane Street employed identical "Intra-day Index Manipulation" tactics during 15 retired of 18 days nether SEBI's scrutiny. For the remaining 3 instances, they implemented an "Extended Marking the Close" approach, which continued for 3 further days successful May 2025, adjacent aft receiving SEBI's informing notice.Also Read | Jane Street ban: Why has SEBI barred US-based trading firm, which made multi-thousand crore profit, from India’s securities markets? ExplainedFollowing a National Stock Exchange advisory successful February 2025, the "JS Group persisted with akin trading activities, disregarding some the Exchange's cautionary connection and their ain pledges," arsenic stated by the regulatory authority.
While the NSE concluded its investigation, SEBI took stringent measures. The regulator issued orders connected Friday prohibiting Jane Street and 4 related entities from participating successful Indian securities trading, whilst directing banks to restrict their relationship withdrawals. Additionally, SEBI initiated proceedings to prehend Rs 4,840 crore successful purported unlawful profits.The probe highlights worrying aspects astir India's derivatives marketplace structure, wherever planetary entities utilising blase algorithms and high-speed trading techniques vie against idiosyncratic retail options investors.
SEBI's probe revealed Jane Street's ascendant position, noting they "consistently moving what appeared to beryllium by acold the largest risks successful 'cash equivalent' presumption successful F&O peculiarly connected scale enactment expiry days.
"The regulatory assemblage emphasised the important magnitude of Jane Street's marketplace activities successful currency and futures segments. They observed that the steadfast understood that Nifty Bank would apt diminution by day's end, considering their planned strategy to aggressively liquidate their greeting acquisitions and beyond.SEBI pointed retired that different marketplace participants remained uninformed astir these developments, starring them to prosecute successful transactions whilst the Nifty Bank scale was being artificially sustained astatine elevated levels temporarily.
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